NPA

How good will be India’s Bad Bank?

Finance - Since our country’s financial system is predominantly bank-based, non-performing Assets (NPA) of Banks have significant impact on the country’s GDP. NPAs also generate a vicious cycle of effects on the sustainability and growth of the banking system, and if not managed properly could lead to bank’s failure. Mounting NPA is a serious...

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Budget Remedy for Non-Performing Assets (NPA)

Finance - THE IDEA OF BAD BANK BY WAY OF ASSET RECONSTRUCTION COMPANY (ARC) Governor of Reserve Bank of India Shaktikanta Das during the question-and-answer session at the 39th Palkhivala Memorial Lecture said, ‘If there is a proposal to set up a bad bank, the RBI will look at it’. The Union Budget presented on 1st February […]...

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RBI ask banks to automate Income recognition & NPA provision

Finance - RBI: Automation of Income recognition, asset classification and provisioning – latest guidelines RBI vide its communication September 14, 2020, informed the banks that in spite of its earlier instructions issued on August 04, 2011, to use IT system in place for identification of Non-Performing Assets (NPA) and generation of related data...

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Moratorium accounts not to be declared as NPA until further notice: SC

Finance - Moratorium accounts not to be declared as NPA until further notice: Order by Apex Court on September 03, 2020 & September 10, 2020 The apex court heard petition of borrowers on September 03, 2020 seeking interest waiver on loan moratorium granted previously by Reserve Bank of India (“RBI”). In the backdrop of COVID-19, banks had [...

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Financial Stability of Banking Sector – Bank & Borrower

Finance - THE FINANCIAL STABILITY OF THE BANKING SECTOR THE BANK AND THE BORROWER A RELATIONSHIP OF TRUST, FAITH, HOPE AND UNDERSTANDING. The advent of banking reforms in India has brought the concept of NPA (Non-Performing Asset) which has changed drastically the perception and approach of the bank and the customer when dealing with loans financed...

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COVID19 Regulatory Package – Asset Classification & Provisioning Clarification

Finance - We advise that as per the circular dated April 17, 2020 on asset classification and provisioning, in respect of all accounts classified as standard as on February 29, 2020, even if overdue, the moratorium period, wherever granted, shall be excluded by the lending institutions from the number of days past-due for the purpose of asset class...

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NPAs of Nationalised Banks started declining 

Finance - Loans written-off from Balance Sheets of PSBs; As A result of Government’s 4R’s Strategy of Recognition, Resolution, Re-capitalisation and Reforms, NPAs of Nationalised Banks have started declining ...

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Steps taken to expedite and enable resolution of NPAs and recovery

Finance - Steps taken to expedite and enable resolution of NPAs and recovery from NPA accounts, include, inter-alia, the following: (1) The Insolvency and Bankruptcy Code, 2016 (IBC) has been enacted, which has provided for taking over the management of the affairs of the corporate debtor at the outset of the corporate insolvency resolution process...

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Audit of Banks- RBI issued guideline for Audit and Auditor appointment

Finance - With regard to Statutory Audit, Reserve Bank of India (RBI) has informed that it has issued Guidelines for appointment of Statutory Central Auditors (SCAs) and Statutory Branch Auditors in Public Sector Banks (PSBs), which covers the norms on eligibility, empanelment and selection as well as the procedure for appointment of such auditors....

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Control and resolution of NPAs

Finance -  The Gross Advances of Scheduled Commercial Banks (SCBs) increased from Rs.25,03,431 crore as on 31.3.2008 to Rs. 68,75,748 crore as on 31.3.2014, as per the Global Operations Data of the Reserve Bank of India (RBI). As per RBI inputs, the primary reasons for spurt in stressed assets have been observed to be, inter-alia, aggressive lendi...

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Mere Balance Sheet entries not amounts to acknowledgment of Debt under Limitation Act

Bishal Jaiswal Vs Asset Reconstruction Company (India) Ltd. & Anr. (NCLAT Delhi) - Section 18 of the Limitation Act, 1963 would have no application to proceedings under I&B Code. Therefore, the issue raised as regards acknowledgement of liability by reflection in the Balance Sheet/ Annual Return would be irrelevant....

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Interest accrued on NPA not taxable in computation of Taxable Income of Bank

CIT Vs Davangere District Central Co-Operative Bank Limited (Karnataka High Court) - The issue under consideration is whether Tribunal is right in deleting the interest accrued on non performing assets from the computation of taxable income for the assessment year under consideration despite the assessee maintaining mercantile system of accounting?...

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Interest on NPA loan can be taxed on receipt basis only

Chitradurga District Co-Op. Central Bank Ltd. Vs DCIT (ITAT Bangalore) - DCIT Vs. Chitradurga District Co-Op. Central Bank Ltd. (ITAT Bangalore) If an assessee adopts the mercantile system of accounting and in his accounts he shows a particular income as accruing, whether that amount is really accrued or not is liable to bring the said income to tax. His accounts shoul...

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Not to declare petitioner as NPA till Further Order: SC

Gajendra Sharma Vs Union of India (Supreme Court) - Gajendra Sharma Vs Union of India (Supreme Court ) The issue under consideration is whether the interest will be charged on loan during moratorium period which is declared by RBI due to COVID-19? As per RBI’s circular dated 27th March, 2020 the RBI has extended the moratorium period from June ...

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Court’s altruistic approach in granting Moratorium for NPA

Transcon Skycity Private Limited Vs. ICICI Bank (Bombay High Court) - The period of the moratorium during lockdown will not be reckoned by ICICI Bank for the purposes of computation of the 90-day NPA declaration period. Further, if the lockdown extends beyond 31st May 2020, then these days will be deferred accordingly, irrespective of whether the moratorium itself is ...

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RBI Resolution Framework 2.0 | Resolution of stress of MSMEs

Circular No. RBI/2021-22/32 DOR.STR.REC.12/21.04.048/2021-22 - (05/05/2021) - In view of the uncertainties created by the resurgence of the Covid-19 pandemic in India in the recent weeks, RBI  decided to extend the facility for restructuring existing loans to MSMEs without a downgrade in the asset classification subject to the some conditions. RESERVE BANK OF INDIA www.rbi.o...

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RBI Circular on Refund/adjustment of ‘interest on interest’ & Asset Classification

RBI/2021-22/17 DOR.STR.REC.4/21.04.048/2021-22 - (07/04/2021) - All lending institutions1 shall immediately put in place a Board-approved policy to refund/adjust the ‘interest on interest’ charged to the borrowers during the moratorium period, i.e. March 1, 2020 to August 31, 2020 in conformity with the above judgement....

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Automation of Income Recognition, Asset Classification and Provisioning processes in banks

RBI/2020-21/37 Ref. No. DoS.CO.PPG./SEC.03/11.01.005/2020-21 - (14/09/2020) - In order to ensure the completeness and integrity of the automated Asset Classification (classification of advances/investments as NPA/NPI and their upgradation), Provisioning calculation and Income Recognition processes, banks are advised to put in place / upgrade their systems to conform to the fo...

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COVID19 Regulatory Package – Asset Classification & Provisioning

RBI/2019-20/220 DOR. No. BP. BC. 63/21.04.048/2019-20 - (17/04/2020) - In respect of all accounts classified as standard as on February 29, 2020, even if overdue, the moratorium period, wherever granted, shall be excluded by the lending institutions from the number of days past-due for the purpose of asset classification under the IRAC norms....

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President assents Banking Regulation (Amendment) Ordinance, 2017 on NPA

No. 1 of 2017 - (04/05/2017) - Banking Regulation (Amendment) Ordinance, 2017 enables the Union Government to authorize RBI to direct banking companies to resolve specific stressed assets (NPA)...

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Recent Posts in "NPA"

How good will be India’s Bad Bank?

Since our country’s financial system is predominantly bank-based, non-performing Assets (NPA) of Banks have significant impact on the country’s GDP. NPAs also generate a vicious cycle of effects on the sustainability and growth of the banking system, and if not managed properly could lead to bank’s failure. Mounting NPA is a serious...

Read More
Posted Under: Finance |

RBI Resolution Framework 2.0 | Resolution of stress of MSMEs

Circular No. RBI/2021-22/32 DOR.STR.REC.12/21.04.048/2021-22 05/05/2021

In view of the uncertainties created by the resurgence of the Covid-19 pandemic in India in the recent weeks, RBI  decided to extend the facility for restructuring existing loans to MSMEs without a downgrade in the asset classification subject to the some conditions. RESERVE BANK OF INDIA www.rbi.org.in RBI/2021-22/32 DOR.STR.REC.12/21.0...

Read More

RBI Circular on Refund/adjustment of ‘interest on interest’ & Asset Classification

RBI/2021-22/17 DOR.STR.REC.4/21.04.048/2021-22 07/04/2021

All lending institutions1 shall immediately put in place a Board-approved policy to refund/adjust the ‘interest on interest’ charged to the borrowers during the moratorium period, i.e. March 1, 2020 to August 31, 2020 in conformity with the above judgement....

Read More

Budget Remedy for Non-Performing Assets (NPA)

THE IDEA OF BAD BANK BY WAY OF ASSET RECONSTRUCTION COMPANY (ARC) Governor of Reserve Bank of India Shaktikanta Das during the question-and-answer session at the 39th Palkhivala Memorial Lecture said, ‘If there is a proposal to set up a bad bank, the RBI will look at it’. The Union Budget presented on 1st February […]...

Read More
Posted Under: Finance |

Mere Balance Sheet entries not amounts to acknowledgment of Debt under Limitation Act

Bishal Jaiswal Vs Asset Reconstruction Company (India) Ltd. & Anr. (NCLAT Delhi)

Section 18 of the Limitation Act, 1963 would have no application to proceedings under I&B Code. Therefore, the issue raised as regards acknowledgement of liability by reflection in the Balance Sheet/ Annual Return would be irrelevant....

Read More
Posted Under: Finance | |

Interest accrued on NPA not taxable in computation of Taxable Income of Bank

CIT Vs Davangere District Central Co-Operative Bank Limited (Karnataka High Court)

The issue under consideration is whether Tribunal is right in deleting the interest accrued on non performing assets from the computation of taxable income for the assessment year under consideration despite the assessee maintaining mercantile system of accounting?...

Read More

Interest on NPA loan can be taxed on receipt basis only

Chitradurga District Co-Op. Central Bank Ltd. Vs DCIT (ITAT Bangalore)

DCIT Vs. Chitradurga District Co-Op. Central Bank Ltd. (ITAT Bangalore) If an assessee adopts the mercantile system of accounting and in his accounts he shows a particular income as accruing, whether that amount is really accrued or not is liable to bring the said income to tax. His accounts should reflect true and correct statement of ...

Read More

RBI ask banks to automate Income recognition & NPA provision

RBI: Automation of Income recognition, asset classification and provisioning – latest guidelines RBI vide its communication September 14, 2020, informed the banks that in spite of its earlier instructions issued on August 04, 2011, to use IT system in place for identification of Non-Performing Assets (NPA) and generation of related data...

Read More
Posted Under: Finance |

Automation of Income Recognition, Asset Classification and Provisioning processes in banks

RBI/2020-21/37 Ref. No. DoS.CO.PPG./SEC.03/11.01.005/2020-21 14/09/2020

In order to ensure the completeness and integrity of the automated Asset Classification (classification of advances/investments as NPA/NPI and their upgradation), Provisioning calculation and Income Recognition processes, banks are advised to put in place / upgrade their systems to conform to the following guidelines latest by June 30, 20...

Read More

Moratorium accounts not to be declared as NPA until further notice: SC

Moratorium accounts not to be declared as NPA until further notice: Order by Apex Court on September 03, 2020 & September 10, 2020 The apex court heard petition of borrowers on September 03, 2020 seeking interest waiver on loan moratorium granted previously by Reserve Bank of India (“RBI”). In the backdrop of COVID-19, banks had [...

Read More
Posted Under: Finance |

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